LIMOGES, France — Legrand reported first quarter 2024 earnings results.
Benoît Coquart, Legrand’s Chief Executive Officer, commented:
“Our first quarter results for 2024 are in line with our expectations in terms of both revenue and margins, as well as free cash flow. In Q1, the building market that represents approximately 80% of Legrand’s revenue experienced a marked slowdown across most geographies, as expected. Against this backdrop, our limited decline in revenue and the resilience of our margins and free cash flow highlight the strength of our business model, the solidity of our market positions, and the execution capabilities of our teams.
In this context, we are continuing with our strategic investments in order to fully benefit from our markets’ recovery. Thus far this year, we have announced three acquisitions, and will keep up the strong pace of external growth in coming quarters. On the innovation side, we will be launching a large number of iconic product lines this year, including the Céliane range of wiring devices in France.
Moreover, the remarkable success of Legrand’s first international employee share ownership plan testifies to the Group’s investment in its teams and to the confidence and full commitment of its employees.”
2024 full-year targets unchanged
In 2024, the Group is pursuing the profitable and responsible development laid out in its strategic roadmap. Taking into account the world’s current macroeconomic outlook, with confidence in its model for creating integrated value, Legrand has set the following full-year targets for 2024:
- low single-digit sales growth (organic and through acquisitions);
- an adjusted operating margin before acquisitions between 20.0% and 20.8%;
- at least 100% CSR achievement rate for the third year of the 2022-2024 roadmap.
Consolidated sales
In the first quarter of 2024, sales fell -5.6% from the same period of 2023 to reach €2,028.2 million.
In a building market in retreat, sales decreased organically by -5.4% for the quarter, including -5.0% in mature countries and -6.5% in new economies.
The impact of broader scope of consolidation was +0.7%, including +1.8% linked to acquisitions and -1.1% to the impact of the Group’s disengagement from Russia. Based on acquisitions made and their likely dates of consolidation, their overall impact should be close to +1.0% full year, of which nearly +1.5% linked to acquisitions and -0.6% to the impact of disengagement from Russia as of October 4, 2023.
The exchange-rate effect on sales in the first quarter of 2024 was -1.0%. Based on average exchange rates in April 2024, the full-year effect should be close to 0% in 2024.
Adjusted operating profit and margin
Adjusted operating profit for the first quarter of 2024 stood at €415.9 million, down -12.8% from the first three months of 2023. This corresponds to an adjusted operating margin equal to 20.5% of sales for the period.
Before acquisitions, adjusted operating margin for the first quarter of 2024 was equal to 20.6% of sales, down -1.6 points from the first quarter of 2023.
In the first quarter of 2024, the level of profitability of the Group once again demonstrates Legrand’s ability to protect its margins in a context of declining sales, thanks to its intact pricing power and solid cost control.
Value creation and solid balance sheet
Net profit attributable to the Group came to €275.9 million, down -16.5% from the first quarter of 2023 and equal to 13.6% of sales. This trend is due primarily to a decrease in operating profit, the negative impact of financial and exchange-rate results, and a corporate income tax rate of 26.0%, stable compared to the first
quarter of 2023.
Net earnings per share stood at €1.05, for a decrease of -15.1% from the first quarter of 2023.
Free cash flow came to 7.2% of sales over the period at a total of €146.1 million.
The ratio of net debt to EBITDA1 stood at 1.2 on March 31, 2024.
Ongoing acquisitions strategy
Legrand is actively implementing its development strategy with, since the beginning of the year, the announcement of the acquisitions of MSS1, a New Zealand-based specialist in cable management (with annual sales of more than €10 million); Enovation2, the Dutch leader in healthcare software in the market for connected health and assisted living (with annual sales of more than €60 million); and Netrack, an Indian specialist in server and network rack manufacturing, notably for datacenters (with annual sales of around €10 million).
The Group announced a minority stake acquisition in UIOT, one of the leading Chinese players in wireless IoT smart-home solutions with strong innovation capabilities, which will allow Legrand to strengthen its positions in the connected building segment.
These acquisitions in the promising areas of datacenters, assisted living and connected solutions further strengthen Legrand Group’s leadership in its faster expanding segments.
Legrand’s full earnings report can be found here.
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